Priceline Ascending

What should we like about Priceline (PCLN) now? The bigger picture pattern is bullish with a clear series of higher highs and higher lows. Also, the price is above the 200-day simple moving average (SMA) and, as far as Tuesday's action is concerned, we saw a healthy thrust back above the 50-day SMA.

Key price support in this stock has also been respected at the $678.67-$680.46 area with the initial low being made at $679.71 on March 19. When this low was made, there was also a healthy cluster of Fibonacci timing cycles between March 19 and March 21. When Fibonacci time and price parameters come together, it makes for a higher probability trade setup. After the initial attempt to rally off this low, we are finally seeing a decided move off these time-and-price parameters.

With that being said, my typical target for a trend trade setup is always the 1.272 extension of the swing into the trade setup zone. For PCLN, target 1 comes in at the $742.03 area. Target 2 is always the 1.618 extension, and in this case, that comes in at $758.98. Target 3 is the 2.618 extension of this same swing, and that comes in at $807.97.

We are already seeing buy triggers since the March 19 low was made. My strategy at this point would be to buy a pullback to the March 19 low. I would watch anywhere between the 0.50 and 0.786 retracement back to it.

My maximum risk on any buy entries will be defined below the March 19 low. I feel the risk/reward parameters on this trade setup are pretty favorable. Let's see if it can get a pullback in the next session or two that will set us up for a relatively low-risk entry.

For more information on how to use my type of trade setups, click here.